9 May 2012
Changing LanesThe economy shifted back into the slow-growth lane in the first quarter of 2012 as economic growth decelerated to 2.2 percent, down from 3.0 percent in the fourth quarter of 2011. The drop was primarily due to continued weak federal government spending. This will likely be a consistent theme through the remainder of 2012 and into 2013 given stimulus programs that are set to expire at the end of this year.
Consumer spending increased 2.9 percent in the first quarter, a relatively healthy clip driven largely by spending on durable goods – cars, major appliances, etc. – which is not surprising given the very low-interest rate environment that allowed consumers to make those large purchases.